Microeconomics - CS & PS Worksheet

Part 2
1. Suppose the daily market for ice-cream sandwiches in
Broward City as:
Supply: Q = 500(P - 2) Demand: Q = 11000 - 1000P
a. What is the equilibrium price?
b. What is the equilibrium quantity?
c. What is the equilibrium producer surplus, consumer
surplus, and total surplus?

2. Suppose the Government puts a quota limit of 2000 on the number of ice-cream sandwiches that can be sold
in Broward City each day using the reason that it does not like people eating too many unhealthy food.
a. What is the equilibrium price?
b. What is the equilibrium quantity?
c. What is the equilibrium producer surplus, consumer surplus, and total surplus?
d. What’s the change in total surplus between 1) and 2)?

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3. Can you think of a reason why this quota limit could be a good thing?

4. Let’s imagine the Government removes the quota limit and instead imposes [forces] a price ceiling of $4 on ice-
cream sandwiches using the reason nobody should ever have to pay more than $4 for an ice-cream sandwich.
a. What is the equilibrium quantity?
b. What is the equilibrium producer surplus, consumer surplus, and total surplus?
c. What’s the change in total surplus between 1) and 4)?

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